Qatar signs $8bn petrochemical deal with Chevron

The Gulf nation’s petroleum company will develop a new plant along the country’s coast with the American energy firm.

Chevron CEO, Qatar Petroleum CEO in Doha, June 2019
Through a joint venture, Chevron Phillips Chemical Co will help gas-rich Qatar develop the largest plant for production of ethylene, a key ingredient in plastics [Naseem Zeitoun/Reuters]

Chevron Phillips Chemical and Qatar Petroleum signed an agreement on Tuesday to develop an eight-billion-dollar petrochemical plant along the US Gulf Coast, the second pact between the companies to build such plants in the last few weeks.

The US Gulf Coast II Petrochemical Project will include a 2,000 kiloton-per-year (KTA) ethylene cracker and two 1,000 KTA polyethylene units. The plant will mostly make hard plastics for everything from pill bottles to coolers to kayaks.

Chevron Phillips Chemical, a joint venture of Chevron and Phillips 66, will be the majority owner with a 51 percent share, with Qatar Petroleum owning 49 percent of the project. The companies expect a final investment decision no later than 2021 for the project, which has a target of starting in 2024.

Mark Lashier, chief executive and president of Chevron Phillips Chemical, said the plants would help fill demand for plastics from an expanding global middle class, which is expected to grow by about 160 million people a year for at least the next decade.

Last month, the companies announced they would build a petrochemical plant north of Doha in Ras Laffan Industrial City that will come on line by 2025 and tap Qatar’s North Field for natural gas feedstock.

Qatar is the world’s largest exporter of liquefied natural gas (LNG). Qatar has been broadening its energy interests since Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed ties with it in 2017. The countries accused Doha of supporting “terrorism” and Iran, charges it denies.

In February, Qatar Petroleum and Exxon Mobil Corp said they are investing in a $10bn project to expand an LNG export plant in Texas, as companies race to meet global demand for the fuel.

Tuesday’s deal was signed at the White House in the presence of the ruling US president, Donald Trump, and Qatar’s emir, Sheikh Tamim bin Hamad Al Thani.

The two petrochemical plant deals spread the financial and trade risks for Chevron Phillips and Qatar Petroleum, Lashier said.

Source: Reuters